Homebuilders started work on a record number of Dallas-Fort Worth homes in the second quarter as buyer demand rose by 18% from a year ago. North Texas saw 15,346 single-family home starts in the three months ending with June — the most ever for a single quarter, according to the latest data from Dallas-based housing analyst Residential Strategies. "As expected, it was another huge quarter for start activity," said Residential Strategies principal Ted Wilson. "Builders established large backlogs of new home orders in the initial months of 2021," Wilson said. North Texas builders are starting houses as fast as they can, but production obstacles are restraining construction. Wilson said for many builders, buyer demand for new homes is far outpacing their capacity to construct homes. Only 2,921 finished unsold new homes were available in the area at midyear, which amounts to an all-time-low months supply at current sales rates.
The U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country's demand, according to a new analysis by mortgage-finance company Freddie Mac . The estimate represents a 52% rise in the nation's home shortage compared with 2018, the first time Freddie Mac quantified the shortfall. The figures underscore the severity of the housing deficit, which is a major factor fueling the current red-hot housing market. The shortage is especially acute for entry-level homes, which makes it more expensive for first-time home buyers to enter the market, said Sam Khater, chief economist at Freddie Mac. "We should have almost four million more housing units if we had kept up with demand the last few years," Mr. Khater said. "This is what you get when you underbuild for 10 years." Freddie Mac reached its shortage figure by assessing the amount of single-family home building needed to match demand from household formation, second-home purchases and replacements of damaged or aging U.S. homes, and comparing that with the pace of construction.
Homebuyers hoping to take advantage of record low mortgage rates are facing a big problem: There aren't enough houses on the market. In North Texas, the supply of homes offered for sale is the smallest since January 2018. "Unless a buyer is looking for a luxury home, there are fewer to choose from," Jim Gaines, chief economist for the Real Estate Center at Texas A&M University, said in a new report, noting the state's supply of active listings plummeted to its lowest level in three and a half years. Only 17,222 single family homes were up for grabs in the more than two dozen counties included in the North Texas survey. With the pandemic, fewer home sellers are putting their properties on the market – especially in the low and moderate price ranges. "This disparity exemplifies the shortage of affordable housing during a time when the rocky economic atmosphere may make lower-priced homes look for financially feasible to the potential homebuyer," said Gaines.
The Texas housing market had a "banner year" in 2019, and looks to be heading for another one, a top economist said at a seminar Friday at the Federal Reserve Bank of Dallas. Nine years after the housing market's downturn, housing sales in Texas have returned to their pre-recession peak, said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University. "That prior peak was back right before the Great Recession," Gaines said. "It was very artificial. It's pretty easy to have a lot of home sales when anybody who could walk into a bank and fog a mirror got 110 percent financing."
The Real Estate Center is predicting an increase in home sales in Texas of about 6 percent in 2020, which would beat the 4 percent increase in 2019, Gaines said. Home prices statewide are predicted to rise 5 percent to 6 percent in 2020, after increasing about 3 percent in 2019. "We've had an outstanding decade, and the market is still really strong," he said. Population projections for the next 10 years call for the addition of 5.2 million Texans, including 1.6 million in Dallas-Fort Worth, 1.7 million in the Houston metro area, 622,000 in Austin and 563,000 in San Antonio, and the population and job growth are driving the housing market, Gaines said.
Construction of new homes surged in December to the highest level in 13 years, capping a year in which falling mortgage rates and a strong labor market helped lift the prospects of the housing industry. The Commerce Department reported Friday that builders started construction on 1.61 million homes at a seasonally adjusted annual rate in December, up 16.9% from the November pace of home building. Housing construction has been rising since July, helped by falling mortgage rates and increased demand as the unemployment rate approached a half-century low. For the year, builders started work on a total of 1.37 million homes, the best showing since 2007. The December building rate was the strongest number since December 2006 during the last housing boom.